American Dream Faces Setbacks in Peoria

By consumerist.comMay 24, 2006

There’s a scandal brewing in Peoria and it doesn’t smell like potpourri.

Allegedly, low-income first-time homebuyers got hooked up with predatory lenders who charged them balloon payments, high interest rates and refinance penalties. Having received government assistance for some time, there were rules in place barring making these loans to these individuals. Now they can’t make payments.

It seems the poor people attended a home-owning class sponsored by the Peoria Housing Authority. The instruction then turned into a pitch session for the predatory loans.

The Peoria Journal Star too tracked the tale, less stridently, but with these quotes:

“These types of loans should not have been part of the program,” PHA attorney Brian Mooty said at a board meeting on Monday.

PHA Executive Director Roger John blamed the situation on a previous employee… who left the agency… “It didn’t come to light until after she left,” John said. “Hindsight is 20-20.”

Ho hum, a 58-year old housekeeper who took one of the loans, “will pay $97,494 in interest on the $53,500 loan and won’t be building equity in the home until making five years of payments.” Whoopsydaisy.